29 slides from Teck Resources Limited Class A's earnings presentation, Apr 24, 2018
Slide 1: First Quarter 2018 Results
First Quarter 2018 Results April 24, 2018
Slide 2: Forward Looking Information
Forward Looking Information Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario).
Slide 3: First Quarter 2018 Highlights
First Quarter 2018 Highlights Strong sales of all principal products First oil and first sales at Fort Hills Completed $230 million share buyback Completed Prefeasibility Study on the NuevaUnión project Acquired additional 13.5% indirect interest in the QB2 project 3
Slide 4: Another Good Quarter
Another Good Quarter Q1 2018 Q1 2017 Revenue $3.1 billion $2.8 billion Gross profit $1.7 billion $1.5 billion before depreciation & amortization1 Gross profit $1.4 billion $1.2 billion Adjusted EBITDA1 $1.6 billion $1.5 billion Q1 2018 Q1 2017 Adjusted profit $753 million $655 million attributable t
Slide 5: Earnings Adjustments in Q1 2018
Earnings Adjustments in Q1 2018 $M Q1 2018 Q1 2017 Profit attributable to shareholders $759 $556 Add (deduct): Debt repurchase losses - 132 Debt prepayment option loss (gain) 9 (16) Asset sales & provisions - (8) Foreign exchange gains - (10) Collective agreement charges - 1 Other (15) - Adjusted pr
Slide 6: Steelmaking Coal Business Unit
Steelmaking Coal Business Unit Q1 2018: Coal Price Assessment2 ($M) • Strong demand Inflation-Adjusted • Underperformance at Westshore negatively impacted Average Price sales, production and operating costs 350 US$197 • Returned to a more typical product mix 300 • Average realized price reflects rec
Slide 7: Zinc Business Unit
Zinc Business Unit Q1 2018: • Red Dog production adversely affected by severe Zinc in Concentrate Sales1,2 (kt) Up 7 kt weather; expect to make up shortfall by year end 133 140 • Strong zinc in concentrate sales at Red Dog • Net cash unit costs after by-product credits above annual guidance, consist
Slide 8: Copper Business Unit
Copper Business Unit Q1 2018: Net Cash Costs • Strong results on higher price/volumes & lower costs After By-Products3 (US$/lb) • Higher than expected grades at Highland Valley, but Down US$0.40/lb not expected to be repeated in remainder of the year $1.55 Looking Forward $1.15 • Production and oper
Slide 9: Energy Business Unit
Energy Business Unit Q1 2018: • First oil on January 27, 2018 • First train in secondary extraction achieved full production; Second train started up on March 23, 2018 • Plant start up exceeded expectations for production volumes and product quality • First sales achieved Looking Forward • Expect co
Slide 10: NuevaUnión Prefeasibility Study Results
NuevaUnión Prefeasibility Study Results Phased Development Approach Prefeasibility Study Parameters (100%) Phase 1 Phase 2 Phase 3 Mine Life 36 years Gold Contained in Concentrate 5.9 million oz Relincho La Fortuna Relincho (104 ktpd) (116 ktpd) (208 ktpd) Copper Contained in Concentrate 15.7 billio
Slide 11: Solid Financial Position
Solid Financial Position Debt Maturity Profile3 • ~$5.1 billion of liquidity1, with ~$1.3B in 1,200 1,000 Repaid in cash + US$3 billion undrawn credit line 800 February US$M 600 • Waneta Dam transaction - expected to 400 close in Q3 2018 = additional $1.2B cash2 200 0 • No significant debt maturitie
Slide 12: Strong Track Record of Returning Capital to Shareholders
Strong Track Record of Returning Capital to Shareholders $5.4 billion returned since 20031 Dividends1 Share Buybacks1 Policy • Regular base annual dividend of $0.20/share, paid quarterly $4.1 billion $1.3 billion • Supplemental dividend since 2003 since 2003 considered each year Return of Capital in
Slide 13: Cash Flow
Cash Flow Cash Changes in Q1 2018 2500 1,120 (460) 2000 (197) (129) $ Millions 1500 (58) (36) (29) 46 1,209 1000 952 500 0 Cash - start Cash flow PP&E, incl. Capitalized Debt interest Purchase Repurchase Dividends Other Cash - end of quarter from Fort Hills stripping and finance and and paid of quar
Slide 14: Creating Value by Advancing Growth Projects
Creating Value by Advancing Growth Projects Multiple catalysts / valuation milestones expected in 2018 and beyond Fort Hills Waneta Dam Transaction NuevaUnión • Second train of secondary • Closure of sale in Q3 2018 • Feasibility Study completion extraction ramping up; third in mid-2019 train to sta
Slide 15: Summary
Summary Strong Execution • Premier operating assets, a proven track record, and enhancing profitability at our operations. Solid Financial Position • Significant liquidity, strong cash flow and the right commodities at the right time. Disciplined Capital Allocation • Our approach balances returning
Slide 16: First Quarter 2018 Results
First Quarter 2018 Results April 24, 2018
Slide 17: Appendix
Appendix Teck
Slide 18: Pre-Tax Share-Based Compensation and Settlement Pricing Adjustments
Other Operating Income (Expense) Simplified Settlement Pricing Adjustment Model Simplified Compensation Expense Model 100 20 75 Pre-Tax Share-Based Compensation 10 50 Pre-tax Settlement Pricing Q1 2018 0 Income (Expense) (C$M) 25 Adjustment (C$M) -10 0 -20 -25 -50 -30 Q1 2018 -75 -40 -100 -50 -125 -
Slide 19: Updated Capital Expenditures Guidance 2018
Updated Capital Expenditures Guidance 2018 Previous (Teck’s share in CAD$ 2018 2018 millions) 2017 Guidance1 Guidance Sustaining Steelmaking coal2 $ 112 $ 275 Copper 126 180 Zinc 168 230 Energy3 34 40 Previous Corporate 4 5 (Teck’s share in CAD$ 2018 2018 $ 444 $ 730 millions) 2017 Guidance Guidance
Slide 20: Notes
Notes Slide 4: Another Good Quarter 1. Gross profit before depreciation and amortization, adjusted EBITDA, and adjusted profit attributable to shareholders are non-GAAP financial measures. Please see “Non-GAAP Financial Measures” slides and “Use of Non-GAAP Financial Measures” section of the Q1 2018
Slide 21: Notes
Notes Slide 8: Copper Business Unit 1. Metal contained in concentrate. 2. We include 100% of production from our Quebrada Blanca and Carmen de Andacollo mines in our production volumes, even though we own 76.5% (90% effective April 2018) and 90%, respectively, of these operations, because we fully c
Slide 22: Notes
Notes Slide 11: Solid Financial Position 1. Approximately $5.1 billion in liquidity as at April 23, 2018. 2. Closing of the Waneta Dam transaction is subject to receipt of regulatory approval and other customary conditions. 3. Maturity profile of public notes outstanding as at March 31, 2018. 4. Net
Slide 23: Notes: Appendix
Notes: Appendix Slide 18: Updated Capital Expenditures Guidance 2018 1. All numbers are as at April 23, 2018. 2. For steelmaking coal, sustaining capital includes Teck’s share of water treatment charges of $3 million in 2017. Sustaining capital guidance includes Teck’s share of water treatment charg
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is profit attributable to shareholders before net finance expense, income and resource taxes, and depreciation and amortization. Adjusted EBITDA, as disclosed on slides 4 and 11 is EBITDA before the pre-tax effect of certain types of transactions that in our judgme
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Net Debt-to-Adjusted EBITDA Ratio & Net Debt-to-Debt-Plus-Equity Ratio (A) (B) (C) (A-B+C) Twelve months ended Three months ended Three months ended Twelve months ended (C$ in millions) December 31, 2017 March 31, 2017 March 31, 2018 March 31, 2018 Adjus
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures Copper Unit Cost Reconciliation Three months ended Three months ended (C$ in millions, except where noted) March 31, 2018 (C$ in millions, except where noted) March 31, 2018 Revenue as reported $ 739 Payable pounds sold (millions) (C) 163.7 By-product revenue (A) 1 (126)
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures Zinc Unit Cost Reconciliation (Mining Operations)1 Three months ended Three months ended (C$ in millions, except where noted) March 31, 2018 (C$ in millions, except where noted) March 31, 2018 Revenue as reported $ 765 Payable pounds sold (millions) (C) 222.1 Less: Trail
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures Steelmaking Coal Unit Cost Reconciliation Three months ended (C$ in millions, except where noted) March 31, 2018 Cost of sales as reported $ 772 Less: Transportation (232) Depreciation and amortization (187) Adjusted cash cost of sales $ 353 Tonnes sold (millions) 6.1 Per
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Reconciliation of Free Cash Flow Three months ended 2003 to (C$ in millions) March 31, 2018 (C$ in millions) Q1 2018 Profit attributable to shareholders $ 759 Cash Flow from Operations $39,802 Finance expense net of finance inc